Nikkei Takes a Breather as Asia Retreats

Japanese stock markets took a breather Friday from this week's rally, while most other Asian indices closed lower, despite a strong lead from Wall Street.

The Nikkei 225 closed down 0.47 percent, as investors took profits following Thursday's 2 percent rally. Meanwhile, South Korea's Kospi finished the trading day 1.3 percent down, as investors remained cautious over tensions with North Korea.

In Japan investors were taking a more cautious approach, after central bank governor Haruhiko Kuroda acknowledged that the Bank of Japan's (BOJ) ambitious inflation target is flexible and said he was looking out for signs that excess liquidity was not causing bubbles in stock or other asset markets.

Scott Redler, Chief Strategic Officer at T3live.com, gives his outlook for U.S. markets and discusses why he sees it as unlikely that the central bank will act to slow asset purchases anytime soon.

Positive data on the U.S. labor market and an encouraging retail outlook pushed the Dow and S&P 500 to fresh record peaks, although weakness in large technology firms capped upside on the Nasdaq.

The Dow Jones Industrial Average advanced for the fourth consecutive session,gaining 62.90 points to end at 14,865. The S&P 500 rose 5.64 points to finish at 1,593. The Nasdaq eked out a gain of 2.90 points to close at 3,300.

Nikkei to Jump 20% Within 12 months: Goldman

Kathy Matsui, Managing Director and Chief Japan Strategist at Goldman Sachs Japan, discusses why she thinks Abenomics is the first credible attack Japanese policy makers have made on deflation. She sees the Nikkei rising 20 percent from current levels.

Japan Movers

On the Nikkei, the strongest gainer was Tokyo Electric Power, which surged near 16 percent, after the company secured the first annual coal import contract for the fiscal year which began on April 1, Reuters reported.

Meanwhile Fast Retailing, dipped as much as 5 percent soon after open, then recovered to 0.87 percent, after the owner of the Uniqlo clothing chain kept its annual operating forecast unchanged on Friday despite its jump in domestic sales for March.

Investors are still watching movements in the yen. Thedollar-yen was trading around the 99.45 level on Friday, still shy of the 100 mark.

We've Seen This Before With North Korea

Patrick Chovanec, Chief Strategist at Silvercrest Asset Management, says most investors have dismissed the North Korean tensions as more rhetoric than reality.

Kospi Muted

Sentiment in South Korea was impacted by ongoing concerns of a possible conflict with the North. Pyongyang launched a fresh round of war rhetoric on Thursday, warning it had "powerful striking means" on standby.

Meanwhile, the Monetary Authority of Singapore (MAS), the country's central bank, said its economy contracted by 0.6 percent year on year in the first quarter, disappointing expectations of modest growth.